SEC Commissioner Hester Peirce Calls Out SAB 121, Claims Agency is “Scaring People Off”
SEC Commissioner Hester Peirce criticized her own agency and its controversial staff accounting bulletin, SAB 121, during Tuesday remarks at the Practicing Law Institute’s 2024 SEC Speaks annual event, claiming the federal agency is “scaring people off.”
To kick off her speech, Peirce referred back to her 2019 SEC Speaks remarks where she compared the SEC to a secret garden where “the maze of staff guidance” may be “inconsistent with a plain reading of the rulebook.”
“Nobody can challenge these diktats because they are not final agency action, but compliance is mandatory for an entity wishing to avoid SEC delays, denials, and enforcement and examination scrutiny,” Peirce said. “So everybody silently complies.”
The SEC Commissioner further likened SAB 121, which mandates that publicly traded companies safeguarding crypto assets must list both assets and liabilities on their balance sheet, to a “weed” that has “sprung up in the secret garden.”
“SAB 121 arguably does not protect investors,” Peirce said. “Its capital implications keep out of the business many banks and broker-dealers that have long years of custody experience.”
Put together by the Office of the Chief Accountant (OCA), the SEC Commissioner went on to suggest the agency’s creation of SAB 121 could qualify as regulatory overreach, noting that the Government Accountability Office (GAO) ruled that the SEC should have submitted the accounting bulletin to Congress.
“To make matters worse, OCA issued—orally at a conference of accountants—a multi-pronged framework for applying SAB 121 to broker-dealers,” Peirce continued. “The Commission has not published that framework or any subsequent staff efforts to clarify the framework’s scope, but many auditors and
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